By TIOL News Service

MUMBAI, MAR 28, 2018: THE Commissioner(A) upheld the order of the original authority denying CENVAT credit of Rs.92,700/- on 'legal services' availed by the appellant for defence of suit filed against the Chief Executive of the appellant company.

Both the lower authorities took the view that the legal service was provided to an individual and the service could, therefore, have no nexus with manufacturing activity. Inasmuch as the same is not an 'input service' in terms of rule 2(l) of CCR, 2004, the authorities emphasized.

The assessee-appellant is before the CESTAT and submits that the legal services were rendered to defend the plaint against alleged theft of technical know-how failing which the entitlement to use the know-how would have been extinguished.

The AR reiterated the impugned order.

The Bench observed -

"5. It is very clear that the legal services were availed by the appellant and that legal services are permissible 'input service' for availment of CENVAT credit as per rule 2(l) of the CENVAT Credit Rules, 2004. Legal services availed in the present dispute was necessary for the continuation of the production facility of the appellant and hence the nexus with the manufacturing process is undeniable. Consequently, the disallowance of CENVAT credit is not correct in law."

The impugned order was set aside and the appeal was allowed.

(See 2018-TIOL-986-CESTAT-MUM)